Question
In: Accounting
Big Co. purchases shares of Little Co starting on 1/1/21. Little Co. has 100,000 shares of...
Big Co. purchases shares of Little Co starting on 1/1/21. Little Co. has 100,000 shares of stock outstanding.
Relevant data shown below:
1/1/21: Purchased 5,000 shares at $18/share, plus $10 commission.
11/1/21: Little Co. paid common dividends totaling $10,000 12/31/21: Little Co. stock trading at $20/share
4/1/22: Purchased 6,000 shares at $21/share, plus $10 commission
11/1/22: Little Co. paid dividends totaling $10,000
12/31/22: Little Co stock trading at $19/share 3/1/23: Sold 1,000 shares of Little Co stock at $19.50/share, less $10 commission. Assume Big uses FIFO to account for their investment in these shares. Required: Prepare entries to record the preceding transactions, and answer the following questions.
Questions:
1. What is the total cost recorded as the "investment" on 1/1/21?
2. How much of an unrealized gain or loss is reported on the 2021 statement of comprehensive income ("xx,xxx gain" or "xx,xx loss")?
3. How much is received as dividends on 11/1/22?
4. What is the balance in the "investment in Little" account at 12/31/22?
5. What is our TOTAL unrealized gain or loss at 12/31/22? ("xx,xxx gain" or "xx,xxx loss")
6. How much of an unrealized gain or loss is reported on the 2022 statement of comprehensive income ("xx,xxx gain" or "xx,xxx loss")?
7. What was the gain or loss on sale of the shares on 3/1/23 ("xx,xxx gain" or "xx,xxx loss")?
Solutions
ekkarill92 answered 4 months agoRelated Solutions
Big Co. purchases shares of Little Co starting on 1/1/21. Little Co. has 100,000 shares of...
Big Co. purchases shares of Little Co starting on 1/1/21. Little
Co. has 100,000 shares of stock outstanding. Relevant data shown
below:
1/1/21: Purchased 5,000 shares at $18/share, plus $10
commission.
11/1/21: Little Co. paid common dividends totaling $10,000
12/31/21: Little Co. stock trading at $20/share
4/1/22: Purchased 6,000 shares at $21/share, plus $10
commission
11/1/22: Little Co. paid dividends totaling $10,000
12/31/22: Little Co stock trading at $19/share
3/1/23: Sold 1,000 shares of Little Co stock at $19.50/share,
less...
Big Co. purchases shares of Little Co starting on 1/1/21. Little Co. has 100,000 shares of...
Big Co. purchases shares of Little Co starting on 1/1/21. Little
Co. has 100,000 shares of stock outstanding. Relevant data shown
below:
1/1/21: Purchased 5,000 shares at $18/share, plus $10
commission.
11/1/21: Little Co. paid common dividends totaling $10,000
12/31/21: Little Co. stock trading at $20/share
4/1/22: Purchased 6,000 shares at $21/share, plus $10
commission
11/1/22: Little Co. paid dividends totaling $10,000
12/31/22: Little Co stock trading at $19/share
3/1/23: Sold 1,000 shares of Little Co stock at $19.50/share, less...
Big Co. owns 80% of the stock of Little Co. On 1/1/23 Little issues $100,000 of...
Big Co. owns 80% of the stock of Little Co. On 1/1/23 Little
issues $100,000 of 10%, 10 year bonds directly to Big for
$103,000. Big and Little both use
straight-line amortization.
Prepare elimination entries RELATING TO THIS INTERCOMPANY
TRANSACTION for 2023 and 2024
Big-Store and Little-Store are both corporations that sell Frisbees. Little-Store purchases all the shares of Big-Store,...
Big-Store and Little-Store are both corporations that sell
Frisbees. Little-Store purchases all the shares of Big-Store, but
both corporations keep their separate legal existence under the
idea of a ________.
A. standstill agreement
B. multinational corporation
C. greenmail
D. share exchange
E. merger
Big Co. owns 60% of the stock of Little Co. On 1/1/22, Little Co sells land...
Big Co. owns 60% of the stock of Little Co.
On 1/1/22, Little Co sells land to Big Co for $50,000. The land
had cost Little Co. $30,000 several years earlier.
On 3/1/25, Big Co sells the land to a thirds party for
$80,000
Little Co reports earnings of $50,000 each year.
What is the unrealized gain on sale in 2022?
What is the income to the NC Interest in 2022 and 2023?
What is the income to the NC...
Big Co. owns 60% of Little Co common stock. On 1/1/23 Big Co sold a patent...
Big Co. owns 60% of Little Co common stock. On 1/1/23 Big Co
sold a patent to Little Co for $32,000. The patent had a book value
of $20,000 on that date, with a 4 year remaining useful life.
On 5/1/26 Little sells the patent to a third party for
$20,000.
Little Co reports earnings of $50,000 each year.
Big uses the FULL equity method to account for their investment
in Little.
Flag this Question
Question 11 pts
How much...
Big Co. owns 60% of Little Co common stock. On 1/1/23 Big Co sold a patent...
Big Co. owns 60% of Little Co common stock. On 1/1/23 Big Co
sold a patent to Little Co for $32,000. The patent had a book value
of $20,000 on that date, with a 4 year remaining useful life.
On 5/1/26 Little sells the patent to a third party for $20,000.
Little Co reports earnings of $50,000 each year.
Big uses the FULL equity method to account for their investment
in Little.
1. How much was the unrealized gain or...
Big Co. owns 60% of Little Co common stock. On 1/1/23 Big Co sold a patent...
Big Co. owns 60% of Little Co common stock. On 1/1/23 Big Co
sold a patent to Little Co for $32,000. The patent had a book value
of $20,000 on that date, with a 4 year remaining useful life.
On 5/1/26 Little sells the patent to a third party for $20,000.
Little Co reports earnings of $50,000 each year.
Big uses the FULL equity method to account for their investment
in Little.
1. How much was the unrealized gain or...
On 1/1/22 Big Co. acquires 40% of Little Co's voting stock for $300,000. Little Co's book...
On 1/1/22 Big Co. acquires 40% of Little Co's voting stock for
$300,000. Little Co's book value on that date was $500,000. Little
Co. had the following mis-valued assets at 1/1/22: Land:
Undervalued by $40,000 (total) Inventory, FIFO basis: Undervalued
by $20,000 (total) Equipment, 5 year life: undervalued by $30,000
(total) Any remaining differential is attributed to goodwill.
During 2022, Little reports earnings of $50,000 and pays dividends
of $10,000 During 2023, Little reports earnings of $60,000 and pays
no...
On January 1, 2X16, Manila Co. has 100,000 outstanding ordinary shares. During the year, Manila Co....
On January 1, 2X16, Manila Co. has 100,000 outstanding ordinary
shares. During the year, Manila Co. reported a net income of
P5,000,000. The income tax rate is 30%. Besides, Manila Co. has
4,000, 10% convertible bonds with 1,000 face amount. Each bond is
convertible into five (5) ordinary shares.
Required: Solve for the following:
1. Determine the amount of basic earnings per share for the
year.
2. Determine the amount of diluted earnings per share under each
of the following...
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